The key to financing that new ride
Keeping your credit score “excellent’’ has its benefits. According to WalletHub’s recent “Auto Financing Report’’, consumers with excellent credit could save a bundle when buying or financing a new car from an auto manufacturer.
A combination of factors are at play here. General Motors and Ford Motor Company enjoyed great sales in April, with SUVs and pickups leading the charge. With automakers anxious to keep the sales momentum going, and interest rates at record lows, consumers looking for a new car might want to stop playing the waiting game.
WalletHub looked at auto loans’ financial offerings from over 150 lenders and found interest rates for new cars have reached their lowest level in three years. According to WalletHub’s research, the average new car loan now charges 17 percent less interest than the average used car loan.
WalletHub also found consumers with excellent credit scores — 720 or greater — can save plenty on used cars. The average interest rate for these consumers has fallen nearly 18 percent since early 2014.
Consumers will lower credit scores should expect to pay more. WalletHub found consumers with a “fair’’ credit rating can pay about four-and-a-half times more to finance a vehicle than a consumer with excellent credit. According to WalletHub, this comes to about $5,300 more in interest payments during the life of a $20,000, five-year loan.
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WalletHub also found car manufacturers offer the most attractive rates. According to the company’s research, car manufacturers can offer an interest rate as low as 1.58 percent to qualifying buyers. Credit unions are not far behind with interest rates as low as 2.39 percent.
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Check out which automakers offer the best rates for financing from the car manufacturers’ financing department.
Car brands with low finance rates
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WalletHub also found 91 percent of auto manufacturers will give consumers a better deal if they finance instead of lease a vehicle.
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